Thursday, 7 March 2013

The lions share

In these dark times we can all,
even lawyers, now look forward to a share of the massive reduction in car
insurance prices that should follow the scything of legal costs that accident
victims are allowed to recover when claiming compensation to which they are
entitled.

Last week two judges ruled that
the Government’s decision to cut fixed costs in “low value” road traffic claims
from £1200 by more than 50%, to £500. Of course, your definition of “low value”
will vary according to whether or not you’re brought up in a world where three
halves make one – see Five grand.

The reduction came largely because
of insurers’ scuttling away from the referral fee games that they have played
on each other for years and falsely claiming that if they all promised not to
rip each other off in future then the job of running a claim could still be
done profitably. Well, not if it’s done competently – Peanuts.

As the High Court heard last
Friday, HMG was persuaded of these fallacies in a closed meeting at Downing
Street and emails between ministers and their insurer friends that were not
open to any scrutiny or comment from those who represent innocent victims. Lord
Justice Elias explained that’s how it’s done and “if people deem it to be
unfair that is a matter for the ballot box, not the court”.

Thanks for that – and roll on
2015.

But the good news is of course
that our Government agreed this treacherous deal for good reason – to save us
all money in these desperate times. They were assured that the massive savings
in legal costs and compensation would fund (presumably meaningful) reductions
in the cost of insurance for Joe Public.

So, how is it going so far?

Well, the MD of Liverpool Victoria
was reported yesterday to have warned consumers not to expect
vastly reduced premiums as a result of the new fixed costs. LV’s John O’Rourke
said he expected a 3% reduction in premium but said he was “not hopeful there
will be much more to come”.

Hmmm. Smacks
of a poor bargain, without anything else considered.

If regard is
had to the announcement last month that LV’s profits last year were up (are you
sitting down?) by 54% you might feel that it stinks.[1]

Meantime,
Direct Lying report a modest increase of only 9% to £461million profit[2] whilst
AXA UK and Ireland announced a rise of 86%[3].

3%?

An AXA
director lectured me last week about what he termed “the lack of profit in
motor insurance since 1994”. I asked him the secret to losing money for two
decades and staying in business, and why anybody should want to stay in the
business. I’ve yet to see an answer to that.

This is
presumably all part of things “getting better” as our current ‘leader’ has put
it today. It looks more like a bum deal to me.

3% - the price
of another hammer blow to justice. Just like the greedy and corrupt bankers who
have wrecked our economy and reputation with impunity, the big money of the
insurance industry holds sway – behind closed doors – with the Government of our
country.

As Alexander the Great may or may not have said, an army of sheep led by a lion is better than an army of lions led by a sheep.